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Tuesday, February 12, 2008

Foreign investors keen on Encorp

PETALING JAYA: Talk has surfaced in the market that foreign investors are eying Encorp Bhd for either a strategic stake in the company or to purchase from the company its prized assets.

A source told StarBiz that negotiations were under way and that the parties interested in taking up a block of shares in Encorp were linked to Middle Eastern investors. Another proposition was foreign interest to purchase Encorp's properties, the source added.

Encorp group chief executive officer Yeoh Soo Ann, when contacted, said he was “not aware” of any Middle Eastern interest in the company.

However, he said there were “enquiries” from interested parties regarding Encorp's properties.

“The locations of our properties are quite good but nothing has firmed up yet. It all depends on pricing,” Yeoh said.

Investors from the Middle East have been flocking to the Malaysian corporate scene over the past few years with interest mainly in infrastructure, construction, property, banking and telecommunications.

Encorp provides an attractive entry into the construction and property segment.

Based on Bloomberg's estimate of Encorp's earnings per share (EPS) at 22.7 sen for the financial year ending Dec 31, 2008 (FY08) and yesterday's closing price of RM1.50, the stock is trading at a cheap price/earnings (PE) of 6.6 times.

The company also turned around last year. For the first nine months ended Sept 30, it posted a net profit of RM69.5mil compared with a loss of RM15.7mil in the previous corresponding period. It is due to release its full-year results by the end of this month.

The overhang over the national teachers' quarters project with the Government was also resolved last year, resulting in subsidiary Encorp Systembilt Sdn Bhd receiving RM11.3mil a month from the Government until January 2028.

This will ease cash flow especially for future projects. Its two present developments, The Strand Damansara mixed commercial project and the Cahaya Alam township in Shah Alam, are also progressing well.

The Strand Damansara still has an unbilled portion of some RM700mil for the development of small office home office and serviced apartments.

Yeoh said the company's prospects remained “optimistic'', given that it had the resources and “quite good cash flow'' to undertake new projects.

Encorp is exploring property opportunities in the southern and northern corridors while looking for construction jobs in east Malaysia.

In September last year, Sarawak Energy Bhd sold a 26.4% stake in Encorp at RM1.46 a share to Pegang Impian Holdings Sdn Bhd. A day later, a 17.9% stake in Encorp was sold at RM3 a share.

By The Star

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